Glassnote take on Childish Gambino in royalty dispute

August 2018

CONTRACTRecorded music, broadcasting

US independent label Glassnote Records has brought a legal action against their former artist Childish Gambino – aka Donald Glover – in a dispute over what should happen to royalties that are earned by his recordings which are paid to the US collecting society SoundExchange.

Glover released three albums with Glassnote between 2011 and 2017, before announcing earlier this year that he was switching his musical allegiances to Sony Music which will will release his next album in partnership with his management firm Wolf & Rothstein.

This lawsuit relates to monies earned by Glover’s Glassnote released records which are collected by SoundExchange, which collects royalties for the use of recorded music from satellite and online radio services including Pandora or iHeart. The royalties collected are split 50/50 between copyright owners and performers and to that end SoundExchange pays the artists their 50% directly (10% of the 50% goes to session musicians via the talent unions).

The artist’s statutory right to 45% of the money technically only applies where SoundExchange provides the licence. However, in the main, where labels have done direct deals with services like Pandora and iHeart, they have continued to allow 50% of the money to flow directly to artists via the collecting society.

But it seems Glover took the position that that he should have received 95% of his SoundExchange royalties – both the copyright owner’s share and the performer’s share less only the 5% deduction to session musicians and news reports say that he has now demanded that Glassnote oay over $1.5 million to compensate him for the ‘missing’ 50% from SoundExchange. In response Glassnote filed its own litigation, asking court to confirm that, according to both Glover’s deal with Glassnote and the relevant statutory licences provided by US copyright law, the artist has received all the SoundExchange royalties he is due.

The court papers reveal that Glover’s deal with Glassnote was a licensing arrangement that provided him with a 50% royalty and Glover has received some $8 million in royalties from the label to date – his share of all the other revenue streams – with another $2 million in royalties due to be paid imminently and the Glassnote he lawsuit states: “Glover, apparently unsatisfied with the approximately $10 million in royalties already paid or due to him by Glassnote and the 45% of the public performance royalties from SoundExchange, took the position that he was entitled to the entirety of Glassnote’s 50% share of public performance royalties from SoundExchange – and that Glassnote was not entitled to any such royalty” and “Glassnote has repeatedly conveyed to Glover over the past several months that his position is untenable – but Glover has not relented. He has continued to demand from Glassnote payments corresponding to SoundExchange royalties which he is legislatively and contractually precluded from receiving. Most recently, Glover, through his representatives, has demanded the payment of $1.5 million from Glassnote for resolution of the SoundExchange royalty dispute under threat of legal action”.

Glassnote have also voiced their objection to some of the media coverage around the case(s) saying that it has misrepresented the dispute. It takes particular umbrage with TMZ’s suggestion that it has accused Glover of “screwing” the label out of money. In a statement issued to Pitchfork, the label states: “Unfortunately the reporting by TMZ is not accurate. We are not claiming Donald Glover screwed us out of anything. Donald Glover made a claim that he was owed 95% of SoundExchange royalties when we are legislatively and contractually required to share those royalties 50/45. When we tried to assert our position, he became strident” adding “His lawyers sent a demand for $1.5 million and threatened a lawsuit on his behalf. We have simply asked the court to review the contract and to provide a declaration of relief that our position is correct pursuant to our contract and federal copyright law and that monies paid by SoundExchange to Glassnote can be retained by Glassnote, in the same way that monies paid by SoundExchange to Donald Glover can be retained by him” and the statement concludes with: “I’d like to point out that in our eleven years of operating we have never been in litigation with an artist. We are not asking for anything back from Donald Glover, just that we are able to retain the monies that are contractually and legally ours and that have already been paid to us”.

It will be interesting to see what the contract between the two parties really says – and we will find out if the cases reaches court.